How Mr Cheese broke Japan's bond of trust

A touching faith in the honesty of strangers is being undermined by rogue traders, reports Richard Lloyd Parry

As the consequences of the $1.8bn (pounds 1.2bn) losses suffered by Japan's Sumitomo Corporation were being weighed by financial analysts all over the world yesterday, another financial scandal was unfolding in a small corner of Tokyo. It was known as the Camembert scandal, and it was perpetrated in the delicatessen of a large department store, where your correspondent had gone to buy a tasty selection of imported cheeses.

I paid with a credit card, and confidently signed the sales slip with the name of Percy Cheese. Without a glance at the signature, my card was returned, my groceries were handed over, and with many bows and honorifics, I was thanked for my custom.

The Sumitomo scandal has tarnished one of the world's most powerful corporations and may yet lead to bankruptcies, resignations and criminal charges in three countries. The Camembert scandal was put right, five minutes later, with an incoherent explanation and payment in cash. But both the pseudonymous Mr Cheese and Yasuo Hamanaka, the Sumitomo copper trader who concealed his astonishing losses over 10 years, were taking advantage of the same trait in Japanese society: the remarkable extent to which personal and business relationships are based on trust.

Even Tokyo, a conurbation of 30 million people, with overcrowding and traffic which could give plenty of Third World capitals a run for their money, has at times the atmosphere of a small English village in the 1950s. It is not true that Japan is crime-free, but figures are so small as to be almost negligible. When I go out I leave windows and doors unlocked with no sense of insecurity.

The most obvious manifestation of this blissful sense of trust are hanko - personal seals, the breadth of a 5p coin, engraved with a design incorporating the owner's name in Japanese characters. Stamped on official documents, from bank withdrawals to deeds of property, they are used instead of signatures.

The advantage is that, unlike a signature, they do not require the presence of the owner. An elderly invalid can claim her pension by simply entrusting her hanko to a friend or relative. But when hanko are stolen, forged, or illicitly borrowed the consequences can be disastrous, and hanko abuse is the stuff of Tokyo urban myths.

It is not that sophisticated security measures are unavailable in Japan, but old habits of trust die hard, and are complicated by related traditions of courtesy and good service. To check signatures on credit card slips would be rude, an implication that the customer is a fraudster.

Relating such customs to fraud on the Sumitomo scale may seem naive, but not so. In September last year, Daiwa Bank announced its own massive loss in uncannily similar circumstances: a rogue trader in its New York branch lost $1.1bn over 11 years in unauthorised bond trades. Worse, it turned out that the bank and the ministry had known about the losses for months without informing the US authorities.

The director of the finance ministry's banking bureau and the head of the international finance division, two of the most powerful men in the country, gave an extraordinary press conference for the foreign media at which they attempted to justify the ministry's tardiness. The reason, we were informed, was that they could not believe such a thing could have happened in a Japanese company. Unlike the West, where fraud and its prevention are a way of life, they explained, Japanese business relationships are built on trust. Tokyo has only a fraction of the number of bank regulators of London or New York; here, a gentleman's word is his bond (even when his bonds have brought him 10-figure losses). It was this unique culture of faith and respect, rather than inadequate regulation or incompetence, which explained the failure to detect the fraud.

It seemed at the time like a brilliant and cheeky ploy not only to evade responsibility, but actually to paint Japan's ailing banking system as a Utopia, in contrast with the corrupt and iniquitous West. But yesterday, as I walked guiltily away with my cheese, I began to wonder.

Undoubtedly, Japan's corporate culture is undergoing change, and events like the Sumitomo shock will only accelerate it. Banks will supervise their employees more vigilantly, signatures will replace hanko, people will lock their apartments and credit card signatures will be scrutinised. These changes are inevitable, and will protect vulnerable people as well as rich institutions. But they will mark the extinction of something unique and touching among industrialised countries - a faith and innocence, a willingness to believe the best which, once past, will never be seen again.

Business, page 3

News
peoplePaper attempts to defend itself
Voices
voicesWe desperately need men to be feminists too
Life and Style
food + drink
Arts and Entertainment
British actor Idris Elba is also a DJ and rapper who played Ibiza last summer
film
PROMOTED VIDEO
Have you tried new the Independent Digital Edition apps?
News
ebooksAn unforgettable anthology of contemporary reportage
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Account Executive/Sales Consultant – Permanent – Hertfordshire - £16-£20k

£16500 - £20000 Per Annum: Clearwater People Solutions Ltd: We are currently r...

KS2 PPA Teacher needed (Mat Cover)- Worthing!

£100 - £125 per day: Randstad Education Crawley: KS2 PPA Teacher currently nee...

IT Systems Manager

£40000 - £45000 per annum + pension, healthcare,25 days: Ashdown Group: An est...

IT Application Support Engineer - Immediate Start

£28000 per annum: Ashdown Group: IT Software Application Support Analyst - Imm...

Day In a Page

Syria air strikes: ‘Peace President’ Obama had to take stronger action against Isis after beheadings

Robert Fisk on Syria air strikes

‘Peace President’ Obama had to take stronger action against Isis after beheadings
Will Lindsay Lohan's West End debut be a turnaround moment for her career?

Lindsay Lohan's West End debut

Will this be a turnaround moment for her career?
'The Crocodile Under the Bed': Judith Kerr's follow-up to 'The Tiger Who Came to Tea'

The follow-up to 'The Tiger Who Came to Tea'

Judith Kerr on what inspired her latest animal intruder - 'The Crocodile Under the Bed' - which has taken 46 years to get into print
BBC Television Centre: A nostalgic wander through the sets, studios and ghosts of programmes past

BBC Television Centre

A nostalgic wander through the sets, studios and ghosts of programmes past
Secret politics of the weekly shop

The politics of the weekly shop

New app reveals political leanings of food companies
Beam me up, Scottie!

Beam me up, Scottie!

Celebrity Trekkies from Alex Salmond to Barack Obama
Beware Wet Paint: The ICA's latest ambitious exhibition

Beware Wet Paint

The ICA's latest ambitious exhibition
Pink Floyd have produced some of rock's greatest ever album covers

Pink Floyd have produced some of rock's greatest ever album covers

Can 'The Endless River' carry on the tradition?
Sanctuary for the suicidal

Sanctuary for the suicidal

One mother's story of how London charity Maytree helped her son with his depression
A roller-coaster tale from the 'voice of a generation'

Not That Kind of Girl:

A roller-coaster tale from 'voice of a generation' Lena Dunham
London is not bedlam or a cradle of vice. In fact it, as much as anywhere, deserves independence

London is not bedlam or a cradle of vice

In fact it, as much as anywhere, deserves independence
Vivienne Westwood 'didn’t want' relationship with Malcolm McLaren

Vivienne Westwood 'didn’t want' relationship with McLaren

Designer 'felt pressured' into going out with Sex Pistols manager
Jourdan Dunn: Model mother

Model mother

Jordan Dunn became one of the best-paid models in the world
Apple still coolest brand – despite U2 PR disaster

Apple still the coolest brand

Despite PR disaster of free U2 album
Scottish referendum: The Yes vote was the love that dared speak its name, but it was not to be

Despite the result, this is the end of the status quo

Boyd Tonkin on the fall-out from the Scottish referendum